Britannia Overpayment - confused

aj9648

Hi

I am just looking into making a one off 10% overpayment on my mortgage balance in January c£10k.

When I spoke to the lady this morning, they confirmed I could do this without a charge and that my monthly payment would also come down, but term would stay the same.

I am assuming by doing this I will not see a huge benefit (apart from monthly cash flow)?? Am I able to keep the payment I make the same as well i.e. keep on paying the c£550 a month which would have more benefit?

Another question I had was that if I had the option of paying the full mortgage off today (which is a realistic option for me) - what charges I would incur - its a 4% charge, so about £4k. I am assuming I would be stupid not to do this and take the hit and be mortgage free !!!

getmore4less

when do you become penalty free?

aj9648

Penalty free in May 2018

ACG

Dont hold me to this as I worked for Co-op not Britannia but my understanding was if you wanted to overpay you could either:
- Bring the term down and keep the payments the same or;
- Keep the term the same but reduce your payments.

aj9648

ACG wrote: »

Dont hold me to this as I worked for Co-op not Britannia but my understanding was if you wanted to overpay you could either:
- Bring the term down and keep the payments the same or;
- Keep the term the same but reduce your payments.

Which option is better?

ACG

If you reduce the term you will pay less interest, if you reduce the payment you will have more money in your back pocket each month.

Whichever of those you prefer the idea of is the better option.

themull1

When i overpay, i leave the direct debits the same and the length of term.

ACG

If you overpay the term and the repayments can not be the same... otherwise whats the point of overpaying and where does it go?

esmy

We have just paid a chunk off a Britannia mortgage and the payment rather than the term has been automatically reduced. If you pay by DD you can increase the amount if you wish and we'll be doing this to shorten the term. We were also told we could pay any amount off at any time at any Co op bank branch. HTH

gazter

if you reduce your payment it will make next to no difference. Always reduce the term.... I think sometimes terminology can be confusing, if you officially shorten your term it can retrigger a full application. When they mean overpayment the term can be shortened without the retrigger.

Imma_Number

ACG wrote: »

If you overpay the term and the repayments can not be the same... otherwise whats the point of overpaying and where does it go?

Term stays the same so the contractual payment reduces but you keep paying the same higher amount. Balance reaches zero before the contractual term. Tada. Mortgage paid off *before* the term.

That's it. It's not as if you keep paying after the balance has reduced to zero.